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I recommend that you use the SkipRearm setting if you plan on running the Sysprep command multiple times on a computer. My district uses an enterprise version of XP however and therefore I can sysprep any number of times. I have a pair of test machines that I have probably syspreped 40 times.

Any way, you are right, as you are testing continue to use the skiprearm=1. Then once you are ready to capture you image, alter your sysprep.inf to exclude the skiprearm.